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Rothschilds to repel sanofi hostile takeo { January 24 2004 }

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   http://www.guardian.co.uk/business/story/0,3604,1130123,00.html

http://www.guardian.co.uk/business/story/0,3604,1130123,00.html

Aventis poised to fend off hostile bid

Heather Stewart
Saturday January 24, 2004
The Guardian

French drug-maker Sanofi saw its share price tumble yesterday as speculation of a hostile bid for rival Aventis gathered pace. The two companies refused to comment yesterday, but market rumours that a move could be made as early as next week sent Sanofi's shares sliding by 7.3%.

A combination of the two firms would create a French drugs corportion worth more than £50bn. With its blood-thinning drug, Plavix, facing patent competition, Sanofi is thought to be keen to shore up its hold on the lucrative American market through a marriage with Aventis - even if that means resorting to a hostile takeover.

However, Aventis's advisers, Goldman Sachs, Morgan Stanley and Rothschilds, are poised to repel any hostile bid.

Analysts believe a merger would create considerable cost savings by combining the drugs pipelines and sales forces of the two French firms.

"I think it makes sense: Sanofi needs to to build up a US sales force," said Max Herrmann of ING Barings. "In general, big is bad; but Sanofi is just a little bit too small: it's still a mid-sized player in the US market."

A price of $60bn (£33bn) for Aventis was mooted yesterday, but industry watchers said its shareholders could use the uncertainty over Plavix to demand a much higher premium.

"The ball's in their court, but if I was an Aventis shareholder I'd be sitting very tight," said one source close to the situation yesterday.

Sanofi itself could become a takeover target this year. Its major shareholders, cosmetics group L'Oréal and oil firm Total, have promised not to sell their holdings until the end of this year. Between them, the two French firms own almost 44% of Sanofi.

Yesterday's speculation was the second bout of merger-fever in the pharmaceuticals sector this week, after Novartis, the world's fifth-biggest drug maker, signalled that it was still interested in Roche, its Swiss rival. Novartis has raised its stake in Roche to 33.3%, putting it within a hair's breadth of being forced by Swiss law to make a bid.



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